053 Exchange Invest Weekly Podcast

In a week of antitrust angst, the big news: Hong Kong exchanges have edged past the Chicago Mercantile Exchange group to top Young's pyramid. My name is Patrick L Young Welcome to the bouse business weekly digest. It's the Exchange Invest Weekly Podcast.

It's a squeak...and we can bicker about forex rates, Ladies and gentlemen, but I make it right now: the Hong Kong exchanges as I record are at $60.32 billion, compared with CME at $60.27 billion dollars, so barely 50 million in it. But nonetheless, Hong Kong exchanges top Young's pyramid of value amongst market operators with the Intercontinental Exchange some way distant in third at 50.6 billion flat on the year to date. Thus Hong Kong exchanges have, at least even temporarily, perhaps it's somewhat similar to what ICE did a number of years back with CME, assumed the mantle of the largest parish market operator.

Meanwhile, in Europe, FESE released an excellent paper with the IPO Task Force and a group of other people. An excellent unified message “equity is the key to unlocking a sustainable economic recovery.” It's not so much whether Brussels is listening, but can Brussels actually act.?

With the first half of the year going by NASDAQ welcomes 69 IPOs and five exchange transfers in the first six months of 2020. New York Stock Exchange they were quick to say they led an overall IPO proceeds for the first half of 2020 particularly because new SPAC listings surged. Therefore presumably if the SPACs can find suitable deals in the future, it will be very very exciting indeed for not just NYSE but the market as a whole. And indeed on which note Dear Santa, may I please have a SPAC for Christmas?

Over in Hong Kong, the bourse is reaping the benefits of the China homecomings, as I mentioned earlier, they've topped Young's pyramid just in the last few hours before we recorded this podcast. Nonetheless, it's a very, very interesting moment. Lots of IPOs coming from China towards Hong Kong as dual listings or initial offerings, many of which would originally have gone to the USA but of course, currently, relations are a little bit sour.

Elsewhere, the LME, the London Metal Exchange, that subsidiary of Hong Kong exchanges group, they're going to keep their ring closed for the time being despite a lockdown easing of COVID-19 in London.

Over on the continent Clearstream and London Clearing House’s EquityClear are collaborating on new post trade connections, which is going to be very interesting. Therefore, lots of global depository receipts and ETF products, EDP products, ETN products ETC products, amongst other things are going to be available for settlement through Clearstream by the third quarter of 2020. It's a useful interoperable link while the great game heats up for the future ownership over Euroclear and its components.

‘Down under’ the Australian Stock Exchange, they're extending their temporary emergency capital raising relief until the 30th of November. An excellent idea given the fact that indeed, neighboring the state of New South Wales where the Australian Stock Exchange is based, of course, the state of Victoria has just re entered lockdown as a result of COVID-19. This is a sound move by the ASX to help company funding. In results this week, the Philippine stock exchange, their income plummeted due to slow trading activity. Clearly questions need to be asked as to why this quarter was so disappointing apart from of course a mandatory closedown in Manila, where others had explosive profit growth. Regulatory factors seem to be playing a role here and stifling the dynamism of the PSE. In the broker dealer fraternity CMC markets had stunning results altogether, as did the online broker

Plus500, who saw sales almost triple as their trading surged. Nonetheless, that's a remarkable turnaround for the wound licking of a month ago, where Plus500 were adding up their losses from a punters’ winning run.

In deals this week, global private equity player TA Associates picked up a 2% stake in NSE. Slightly hazy they're said to have paid 150 million dollars for a little over 2% in multiple transactions. Later, we learned that ICICI securities had successfully advised TA Associates for at least an $86 million stake purchasing NSE.

Charles Schwab completed the acquisition of Wasmer Schroeder while the Zagreb bourse, they raised by 10% from 20 to 30% their stake in the regional crowdfunding platform funded in South Eastern Europe. They have no intention of going beyond the 30% stake, but apparently the price they paid for the 10% was just 3700 US dollars.

Antitrust, I mentioned at the top of the show, the UK’s CMA, they're very, very worried indeed about Ion the well known if somewhat secretive, vendor of many things in financial markets, after they completed a purchase of Broadway Technology... They say that raises fundamental competition issues which could yet perhaps see an enforced divestment akin to the ICE having to sell Trayport.

Over in Singapore, they're going to probe the LSE Refinitiv deal that comes in the wake of, of course, the European Commission themselves opening an antitrust investigation into the LSE’s rather considerable deal to acquire the former Thomson Reuters financial vending business.

New markets this week. Great news in Europe, the CBOE, they are going to launch a Dutch derivatives hub in 2021. Even better news, that's going to be headed up by former senior executive at a LIFFE and ICE, Ade Cordell. The only downsides to this deal are that clearing up the mess of Euro CCP, which has now been fully acquired by CBOE, is costing more than anticipated to cleanse overall. There's also the side issue that we are disappointed that the confirmation that Ade is going to head CBOE’s European exchange arm presumably and thus he won't be the next James Bond. Good news for the parish though all round and hopefully CBOE Europe will see the opportunity to create a new wave of client centric derivatives through their Amsterdam exchange.

Other platforms: a new platform matchmakes funders and tree planters to protect the forests, 110 designated organizations from 40 countries have registered so far. And in Iran, there's going to be a real estate Stock Exchange to promote transparency across the property market.

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Over in crypto land Binance, have got the third branded emoji on Twitter as their anniversary looms.

I'm not sure every exchange will understand what an emoji on Twitter actually is, even in their comms departments, and I'm not sure every bourse needs such things, but it is indicative of the very different ways the legacy exchanges and the crypto upstarts communicate with their communities. Elsewhere MidChains, a virtual asset trading platform closed their latest funding round from their Abu Dhabi headquarters, major investors include Mubadala Capital, and closer to the parish, Miami International holdings the parent company of the Miami Exchanges.

Meanwhile, Binance was ordered this week to Immediately halt offering derivatives trading in Brazil. Although it wasn't entirely clear whether or not they had complied. At the same time with a daily fine of 186 US dollars for ignoring the rule, one might argue the Brazilian regulator is a tad toothless.

In product news this week, the London Metal Exchange, they have launched a major request for information an RFQ I suppose in terms of position papers. They're looking for information as they seek to boost their options market with a new electronic system. Elsewhere, only a fraction of the material actually used in everything from aeroplanes to refrigerators is held in London Metal Exchange warehouses and talking of course about aluminium amongst other metals and the LME are now moving to public private metal stockpiles. That move in aluminium alone ought to shake the market up albeit upsetting the incumbent players who thrive on information disparity.

The Hong Kong exchanges they've kicked off trading of the first 10 MSCI futures contracts that they poached from the Singapore exchange just over a month ago. While the Singapore exchange are fighting back, they're offering Taiwan Index Futures. It's a good start to the SGX trying to regain momentum from the body blow of the MSCI defection to Hong Kong.

In Dublin, Euronext, they've launched the ISEQ 20 index futures: the first time there's been a future based on the Irish stock index.

Elsewhere, a lot of questions being raised this week about stock tickers. In other words, how come it's the beating heart of US finance and the EU doesn't have one? Actually, BMLL Technologies have. It's operating via Plato right now, it's just the EU doesn't seem to have noticed yet.

Over in Nairobi, the CMA have allowed coffee trading under the old payment rules. While hopefully there will be an urgent implementation of the new coffee trading rules in the near future.

In Russia, Moscow exchange plan to start trading in foreign shares on August the 17th, giving direct access to a lot of US equities.

Meanwhile, of course, no week would be complete without quick delve into libor and its replacement. The London Stock Exchange's FTSE Russell has joined the libor replacement race. It's a curious tale though given the strong Reuters benchmark business already extant interest rates which will be acquired through Refinitv, so why is LSE building another, it's hardly...or is it? A lack of deal confidence? Is it a pure hedge or perhaps a sign that they're looking to hive off the Refinitiv index arm which would be a hefty chunk of value as soon as the Refinitiv takeover is completed, if indeed it is completed, because of course, as we know, the antitrust authorities are not very eager at the moment.

Compare and contrast the new FTSE Russell calculations where essentially you receive the calculation In a great deal of opacity as to how it's been reached with ICE benchmark administration's announcement later in the week; they've launched their beta version of ICE term Sonia rates. It's very interesting. They've got a waterfall approach in the beta for their Sonia reference rates and a rather comprehensive slew of data sources all outlined so that everybody can understand the great and strenuous efforts that ICE have been making in order to create their replacement for libel.

One final piece of product news this week. Good news, the UK is signaling an end to daily redemptions for property funds, it's a sensible approach. investing in property funds is a good idea, but investors have to appreciate the liquidity issues. Of course, the same thing has to be considered of the many property tokens AGAIN. Now coming to market

Over in technology. It was a quiet day, well, at least one quiet day for Germany's stocks and all the client businesses of Germany's DB1 software arm. In regulatory news, the Hong Kong securities regulator the SFC, they have warned HKEX over potential conflicts of interest. They told the exchange to improve the “Chinese wall” between listing and business departments and ensure the listing departments regulatory regulatory independence.

Over in India the interviews are looming possibly as early as July 15th to choose the next chief of the Indian regulatory body Sebi. The race has heated up as the tenure of Chief Executive Tyagi ends next month.

In crypto land in regulation this week, the CFTC is waiting on the SEC to allow futures trading of more digital assets, while at the same time the FATF, they're planning to strengthen global supervisory frameworks for crypto exchanges to avoid money laundering.

In people news, the exciting event of the week was David Feltes, the former CEO of market makers, Marquette partners and also the CME Europe COO, amongst many other positions. David Feltes is breaking cover in his new role as the UK head of practice for Capco in financial market infrastructure, all the very very best to him. Of course, Capco have a fine pedigree of senior management including the likes of Jos Schmitt, who once held a similar role to Dave's and now leads the Canadian stock MTF Neo.

Elsewhere again, good to see Ade Cordell back in a senior executive role having joined CBOE to oversee their expansion into European derivatives. As mentioned earlier, he's become the president of CBOE NL, the upcoming CBOE European derivatives market, which will be cleared through the upgraded Euro CCP that CBOE have just fully acquired.

In the Channel Islands the international Stock Exchange, they've announced a succession plan for the group of Chairman farewell to private equity mogul Jon Moulton after a very successful seven year spell as chairman of the Channel Islands based exchange and welcome to Charlie Geffen who will be taking over.

Meanwhile, in Brexit news, it was very much a case of market access will they won't they what on earth is going on, it seems as if perhaps the door is ajar to a deal from the European Union. Although nonetheless, a great many UK practitioners will be worried about the arbitrary 30 day notice nature that the EU can deploy in order to shut you out of the European financial market.

At the same time for those of you who are looking forward to summer and have some time on your hands: great news, NASDAQ have launched a coloring book for all ages. It's a neat initiative to show the global nature of NASDAQ's team, while also presumably helping many of the world's real estate agents stay occupied during the afternoons in this COVID-19 era.

And on that mysterious and magnificent note Ladies and gentlemen, I will bid you Good day. Thank you for listening to this Exchange Invest Weekly Podcast number 53. With myself Patrick l Young, have a great week in markets and catch up next weekend.

LINKS

Equity: the key to unlocking a sustainable economic recovery

FESE

Nasdaq Welcomed 69 IPOs And Five Exchange Transfers In The First Six Months Of 2020

GlobeNewswire

NYSE Leads In IPO Proceeds For First Half Of 2020 As New SPAC Listings Surge

Yahoo Finance

In Pandemic Era, Entrepreneurs Turn To SPACs, Crowdfunding And Direct Listings

TechCrunch

Hong Kong's Bourse Reaps Benefits Of China Homecomings

LME To Keep Ring Closed Despite Easing Lockdown

American Metal Market